Iain Duncan Smith, the work and pensions secretary, is to take the first steps to downgrade the former Labour government's commitment to eradicating child poverty in 2020 with a green paper looking at new non-income indicators of poverty.

The Conservative minister has insisted that the government is "not departing from the idea of measuring income", but wants to include other measurements "to let us know whether there's a life change taking place".

In a speech setting out his thinking, Duncan Smith will argue it is "increasingly clear that poverty is not about income alone". He will stress that he is not abolishing Labour's child poverty target, which is enshrined in law and commits the government to ensure that there are no children in households where income is 60% or less of median income.

But Conservative sources said the target could not be reached even if £19bn of extra income were poured into anti-poverty measures such as tax credits.

The announcement will come on the day that new statistics show that Labour's effort to halve child poverty by 2010 has been missed by hundreds of thousands.

This ensured this was not only fair to them but "becomes fair to taxpayers who accept that what they are paying their taxes for is reasonable because they see something changing in the environment".

He said current measurements of poverty did not track who was in and out of work or what happened to families.

"What I'm talking about is getting away from a system that got so trapped in the idea of meeting a relative income target so narrowly that more and more money was spent on welfare but keeping people out of the work process," he said.

"What we need to do is make sure we tackle poverty but tackle it in the process of trying to move them on."

Duncan Smith said that up until 2003, Labour had picked off "low-hanging fruit" – the "easy groups" that lay just below the median income line of 60% – and who made up "the bulk" of those who "moved out" in the early years.

But he claimed that the Labour government then "panicked" when the position then flattened as the economy grew, and went "on a massive spending spree on welfare" to try to hold those figures as upper incomes rose.

"It's not just a case of missing their targets ... We wonder why we got in such a problem over debt and the deficit and it's because actually in chasing the target it got more and more difficult and more and more money had to be spent."

The minister highlighted the pitfalls of using relative poverty alone as a measure of people's situation because it can fall when the economy is failing.

"Ironically ... as the economy shrinks and shrank during the big recession under the last government and we've had a bit of a recession in the last couple of quarters, actually, what happens is the higher incomes and the median incomes then fall back. And here's what happens – actually relative poverty starts to fall, so you could argue you're successful because fewer people are relatively poor.

"I don't want to be a secretary of state who sits here and tells you that because of the recession, actually we've done pretty well, we've actually got more people out of poverty when, in truth, that's not the case."

Frank Field, the former labour welfare minister, has been deeply critical of the target, and has proposed a range of other life-chance indicators, such as school readiness and child birth weight. Duncan Smith's former thinktank, the Centre for Social Justice, has also proposed a range of non-income measures.

In opposition, David Cameron said relative income poverty did matter.

Iain Duncan Smith will point out that the last government spent £150bn on tax credits alone between 2004 and 2010: "Overall, the welfare bill increased by some 40% in real terms, even in a decade of rising growth and rising employment. Yet for all the extra money, the earlier and easier successes were followed by flat-lining results.

"By this narrow measure, if you have a family who sit £1 below the poverty line, you can do a magical thing.

"Give them £1 more, say through increased benefit payments, and you can apparently change everything – you are said to have pulled them out of poverty."

He will argue that increased income from welfare transfers remains temporary if nothing changes. "Take the example of a poor family where the parents are suffering from a drug addiction. Giving the parents extra money moves them over the line and out of 'poverty' on paper. Yet because much of the money will almost certainly go on drugs, the family still lives in poverty. Coming off drugs is a therefore a vital step for them getting out of poverty and staying there."

He will say work is the best route out of poverty, since it makes individuals responsible for themselves and their families, helps them play a productive part in their community, and creates an environment where success through hard work is celebrated, so that children can aspire to even more.

He will claim: "Universal credit will ensure that the vast majority of children will be lifted out of poverty if at least one parent works 35 hours a week at the minimum wage – or 24 hours if they are a lone parent.

Neil O'Brien, the director of the Policy Exchange thinktank, welcomed the move, saying: "Having a child poverty target is right, but the current target needs to change. It has pushed politicians towards short-termist solutions to poverty, and spending more on benefits. We need targets which address the root causes of poverty like worklessness and poor education."

Responding to Duncan Smith's announcement, the shadow work and pensions secretary, Liam Byrne, said: "In a great country like Britain we should stand behind parents fighting to bring up their children free of the curse of poverty. Behind Cameron's promises we learn today that those parents and their children will now be abandoned and told: 'You are on your own.'"